In the latest Seeking Alpha community interview, HealthShares founder Jeff Feldman outlines the long-term bull case for biotech stocks:
Healthcare currently represents 16% of the U.S. economy and is expected to grow to 20% in just the next 8 years. The “baby boom” generation is now 42 to 60 years of age and numbers 78 million people. Primarily they are healthy and have not needed to rely on the healthcare industry. But that is about to a change in a big way as this group ages. This is happening at a time when healthcare is already in dire straits with 45 million people with no health insurance, costs growing at more than 8% per year and Medicaid and Medicare facing multi-trillion dollar deficits. At the same time, technology is advancing rapidly as we evolve from the classical pharmacology model to customized medicine (pharmacogenomics).
But most of the mutual funds and ETFs that own pharmaceuticals and biotech are market cap weighted and therefore heavily skewed toward Big Pharma (Pfizer, Merck, Schering, Wyeth, etc.). So most of the opportunity is in biotech and most investment is going to the pharmaceutical companies.
Full interview here.